Proceedings of the Standing Senate Committee on
National Finance
Issue 14 - Evidence - March 13, 2012
OTTAWA, Tuesday, March 13, 2012
The Standing Senate Committee on National Finance met this day at 9:28 a.m. to study the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2013.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: We are continuing our study of the Main Estimates for the fiscal year ending 2012-13, which were referred to our committee.
[English]
In the first session this morning, we are pleased to welcome back officials from Human Resources and Skills Development Canada as well as the Canada Mortgage and Housing Corporation.
Appearing from Human Resources and Skills Development Canada are Alfred Tsang, Chief Financial Officer; Jacques Paquette, Senior Assistant Deputy Minister, Income Security and Social Development Branch; Louis Beauséjour, Associate Assistant Deputy Minister, Skills and Employment Branch; Paul Thompson, Assistant Deputy Minister, Processing and Payment Services Branch, Service Canada.
Appearing on behalf of Canada Mortgage and Housing Corporation is Marc Joyal, Vice-President and Chief Financial Officer.
Since we have a little over an hour for this panel, and so we can get under way with questions and answers, I understand Mr. Tsang will be the spokesperson for the entire group.
[Translation]
Alfred Tsang, Chief Financial Officer, Human Resources and Skills Development Canada: Honourable senators, I am pleased today to provide an overview of the Main Estimates for Human Resources and Skills Development Canada.
[English]
I am pleased to address the 2012-13 Main Estimates for Human Resources and Skills Development Canada.
Since you have already introduced my colleagues, I will inform the committee that my colleagues will help me answer your questions.
[Translation]
The mission of HRSDC is to build a stronger and more competitive Canada, to support Canadians in making choices that help them live more productive and rewarding lives, and to improve Canadians' quality of life.
We provide temporary income support to eligible unemployed workers, and help them prepare for and keep jobs. In addition, we assist students in accessing post-secondary education and provide a universal child care benefit to parents who are raising young children. We also help newcomers, Aboriginal people, people with disabilities and vulnerable Canadians access the job market and improve their quality of life.
Our goal is to increase participation in the labour market while removing barriers to post-secondary education and skills development.
[English]
HRSDC provides seniors with basic income security. One departmental accomplishment over the past year was an enhancement or top-up to the Guaranteed Income Supplement, or GIS, for seniors with little or no income. This was announced in Budget 2011. This required amendments to the Old Age Security Act. As a result, about 680,000 seniors across Canada became eligible for an increase in their GIS benefits starting July 2011. As of that date, seniors entitled to the GIS received additional annual benefits of up to $600 for single seniors and $840 for couples.
The Chair: Is that per year or per month?
Mr. Tsang: Annual benefits.
The Chair: Thank you.
Mr. Tsang: At the same time, the department reached out to seniors to inform them of the enhanced benefit, and operational readiness was in place across a variety of delivery channels such as in person, call centres and processing.
[Translation]
Service Canada is the face of the Government of Canada to Canadians. It serves Canadians through more than 600 points of service. Service Canada also delivers Government of Canada programs and services on behalf of other departments and agencies.
[English]
As such, we have to be aware of evolving needs and rising service expectations. New and emerging technologies will enable us to respond to client preferences while improving operational efficiency.
Our department continually adapts to an ever-changing environment. Now, let me talk about our estimates.
HRSDC is responsible for designing and delivering some of the Government of Canada's most well known statutory programs and services. These include Old Age Security, the Canada Pension Plan, Employment Insurance, Canada Student Loans and Grants, National Child Benefit and the Universal Child Care Benefit.
For 2012-13, HRSDC is estimating budgetary expenditures of $47.6 billion. Of this amount, $2.4 billion requires approval by Parliament. The remaining $45.2 billion represents statutory forecasts and does not require additional approval. It is presented to Parliament for information purposes.
In total, the department is estimating a budgetary increase over previous year's Main Estimates by $2.1 billion, which is primarily associated with statutory items.
For example, the forecasted Old Age Security and Guaranteed Income Supplement represent an increase of $1.4 billion and $574 million, respectively. These increases are due to changes in the average rate of payment and in the number of beneficiaries.
Other factors contributing to the changes in the estimates are: a $102.7 million increase in Canada Student Loans; a $70 million increase in the Canada Education Savings Grant payments; an $87 million increase in the Universal Child Care Benefit payments; a $6.3 million increase in Canada Disability Savings Bond payments; and $26 million in Canada Disability Savings Grant payments, offset by a $100.3 million increase in grants and contributions.
While our vote 1 operating expenditures show a decrease of $21.4 million, this total includes a transfer of $51 million to Shared Services Canada.
[Translation]
As you can see, we have a huge task in administering these programs and delivering these benefits. And we need to make wise use of our financial resources. Our challenge is to continue meeting the needs and expectations of Canadians.
[English]
My colleagues and I would be pleased to answer your questions. Thank you.
The Chair: Thank you, Mr. Tsang. I have a number of senators anxious to participate in questions and answers.
Senator Ringuette: This is not a question, but a comment. This committee and its members asked you questions at a previous meeting on November 22 with regard to Supplementary Estimates (B). I received the answers yesterday. That is almost four months, and I wish we could get answers a lot quicker than that. That is a formal request.
Remind me: Was the daycare program in the workplace under your department?
Mr. Tsang: Are you talking about the Universal Child Care Benefit?
Senator Ringuette: No, I am talking about the program to create daycare spaces within the workplace. Was that under Human Resources and Skills Development Canada? I will find out where it was and where it has gone.
In New Brunswick, the standard to answer the applicant on applications for CPP disability payments is over 180 days, while in Ontario it is 90 days. I would like to know why New Brunswickers have to wait twice as long as Ontarians to get an answer to their CPP disability applications.
Paul Thompson, Assistant Deputy Minister, Processing and Payment Services Branch, Service Canada, Human Resources and Skills Development Canada: On CPP disability, we have standards for the different types of transactions, for the initial applications as well as reconsiderations.
We are carefully monitoring the differences between regions and, where necessary, we are trying to move some work around to get through the backlog. We are making best efforts to try to equalize the service levels across the country. There are still some gaps, but they are getting lower over time as we bring the workload down.
Senator Ringuette: I asked the same question three years ago. That was three years ago, and the situation has still not been resolved.
If it is a money issue, where in these estimates can I see that you are acquiring the funds to ensure that New Brunswickers are treated the same way as all other Canadians with regard to CPP disability applications? Where are the human resources? It has been three years since I asked for this issue to be resolved and as of last month, it is still not resolved.
Mr. Thompson: CPP disability is financed out of the CPP account, not out of Main Estimates. That is one point I make.
More to the point of the question, the service level differences are diminishing over time. We are making progress. I can provide the senator with some information on that following the meeting.
The Chair: Please provide it to the clerk and all senators will receive it.
Senator Ringuette: As I said earlier, it has been three years. I realize you are saying that particular program is served under the particular human resources. However, last week, you indicated to the members of this committee that the department charges the CPP account for the service it delivers for that program. I reiterate my request. I do not see why this issue, after three years, has not been resolved. I see your team here often. You can bet that the next time you are in front of us I will ask the same question until the issue is resolved. It is unacceptable that New Brunswickers should be treated that way.
Senator Runciman: I have several questions about OAS and the Guaranteed Income Supplement. When those programs were instituted, how long was the average recipient collecting? The 1951 average life expectancy for men was 66 years and women 70. Do you have any numbers in terms of how that has changed over the years?
Jacques Paquette, Senior Assistant Deputy Minister, Income Security and Social Development Branch, Human Resources and Skills Development Canada: You are right. Life expectancy has increased significantly since the program was established. What we look at is life expectancy at 65 years old. Since the program was established, life expectancy has increased by five years. In other words, on average, people who are now collecting OAS are collecting it over a period of time that is five years longer on average.
Senator Runciman: The figures I have as of now indicate the average life expectancy for males is 79 years of age and for women is 84 years of age. That is significantly higher than five years.
Mr. Paquette: There are two ways of looking at life expectancy. One is at birth and the other is at the age of 65. We look at life expectancy at the age of 65 and that increase is now closer to 85 years of age because, of course, when you look at the age of 65, there is a slight difference in terms of calculation. That is what the factor is taking into account.
Senator Runciman: You do projections into the future, looking at implications. If someone is turning 65 years old 20 years from now, how long would they be expected to draw OAS? You must do those kinds of projections in order to give us an indication of what the future holds.
Mr. Paquette: I do not have those specific figures with me on hand, but this is fundamentally the work that the Chief Actuary must do because all our calculations in terms of costs of the program are based on the projections that the Chief Actuary would make. He has his model, which includes many factors, but one of them is of course the evolution of life expectancy because he will make projections about the cost of the program, for example in 2030 and so on, based on the number of people we are expecting to have at that time and how long they will collect benefits.
Senator Runciman: I cannot talk about policy, but in terms of percentage of program spending that you referenced, what are you looking at in terms of these programs consuming 20 years from now? Another figure we came up with getting ready for this was that retirees currently represent about 12 per cent of the population and in 2030 they are projected to represent 25 per cent of the population. Can you speak to the percentage of program spending that would represent down the road?
Mr. Paquette: Sure. I can give you a few numbers to illustrate the answer. When we look at the number of beneficiaries, for example, for OAS only, at the moment there are around 4.8 million. By 2030, we are expecting this number to go up to 9.3 million, which is double.
I am referring to the projections by the Chief Actuary. In 2011, it is roughly $38 billion, which is the cost of OAS/GIS, and by 2030 we are talking about $108 billion. That is including inflation. Without inflation it is probably closer to $68 billion, from $38 billion, which is the current amount.
Senator Runciman: That is a significant figure. I want to highlight the implications going forward.
Senator Peterson: On page 168, I was going to inquire about the drop in operating expenditures, $21 million, but you indicate in your report that all of that plus another $30 million was funneled over to Shared Services Canada. Where did you get the other $30 million from? What is Shared Services Canada? Why would they be over in operating expenditures?
Mr. Tsang: I believe you have Shared Services Canada coming later this morning. I am sure they would be in a very good position to explain what they do.
I can answer the senator's question on the issue of the operating expenditures. The decrease of $21.4 million in vote 1 operating expenditures is made up of a number of pluses and minuses. First, we have a transfer of $51 million to Shared Services Canada. Furthermore, we have a decrease of $15 million in strategic review. We have a decrease of $6 million in advertising campaign that was in last year's Main Estimates that is not in this year's, and I have a whole list of smaller items.
Here is one that brings me back to one week ago. We talked about the $59.7 million. Because it was approved in time to be included in the Main Estimates, if you offset that — it is an increase — with a number of the decreases I have outlined, you have a net total of $21.4 million. It is made up of a number of minuses and a plus.
Just to jog senators' memories, I should add that the $59.7 million is for the adjustment for the administrative cost recovery formula that we talked about a week ago this morning.
Senator Peterson: On page 169, you have an amount to Canada Mortgage and Housing Corporation to reimburse them for loans and forgivable grants, et cetera. Is this ongoing? What makes that up? That is a lot of money. Why is that here? Why is that not in CMHC's operations?
Marc Joyal, Vice-President and Chief Financial Officer, Canada Mortgage and Housing Corporation: Maybe I can answer this one. CMHC is reimbursed for the support we provide to low-income Canadians that need help in the housing field. We provide subsidies to low-income Canadians to have better social housing, and the government reimburses us for those activities.
It is $2.139 million total for the year and it is made up of different programs of affordable housing on-reserve, repairs for social housing stocks, as well as transfers of money to provinces under the social agreement transfer we have with them for social housing.
Senator Peterson: It is like outsourcing, then. CMHC does this for you; is that what you are saying?
Mr. Joyal: CMHC is doing so on behalf of the government. The government gives us $2.1 billion, and $1.7 billion of that is transferred to provinces or to social housing groups to provide social housing activity over a long-term period.
CMHC itself also delivers programs on-reserve for First Nations, which is another component of our programs. We also have renovation programs to repair social housing stocks, to keep them in good order and maintenance.
That would explain the $2.1 billion, roughly, of what we use.
The Chair: Mr. Tsang, I need some clarification of your answer to Senator Peterson's first question. I think you said $59 million in vote 1 was related to the administrative cost recovery program that we discussed last meeting. Is that money that you paid out to have services performed by somebody else for you, or money you brought in to your vote 1 by virtue of you providing services elsewhere?
Mr. Tsang: I did indicate that there is $59.7 million for the adjustment of the administrative cost recovery formula. What we talked about a week ago today was that we have a corresponding decrease in our authority to charge the EI account and increase in the appropriated funds. Periodically, we do a review of the appropriateness of our charges between the three what I call sources of our funds for HRSDC, which is the EI operating account, the CPP account, and the appropriated amount. That is an adjustment between the three sources of funds.
We have a corresponding decrease in charging the EI operating account, and this is an increase under the appropriated amount because our review indicated a small adjustment is required.
The Chair: The increase is in your general departmental expenses; is that right?
Mr. Tsang: Yes.
The Chair: I understand that now. Thank you.
Senator Buth: I have a couple of questions. One is related to page 173, the Wage Earner Protection Program payments. There is a reduction there, essentially, of $2 million. Can you explain why that reduction is occurring there?
Mr. Tsang: Mr. Chair, I have my colleague from the labour program, who would be very happy to answer the senator's question.
Senator Buth: You have a cast of thousands up there.
Ashique Biswas, Director General, Human Resources and Skills Development Canada: The decrease in the Wage Earner Protection Program is a result of a strategic review that the labour program underwent. Also, it is an adjustment for the actual demand of the program, and that adjustment was in the amount of $2 million.
Senator Buth: Is that strategic review not a part of the strategic review going on right now? That was just a standard strategic review that was done, was it not?
Mr. Biswas: It was done in 2009, yes.
Mr. Tsang: If I may just add to the senator's question, this is a statutory program. I just want to ensure it is clear that this represents a forecast and does not necessarily represent a ceiling.
Senator Buth: I have another question on the payments to provinces and territories and municipalities on page 174. It is a decrease of almost $40 million, essentially in payments to the provinces. I assume this is a statutory requirement as well, is it?
Mr. Beauséjour: That category includes a number of programs that HRSDC provides to different populations. The big decrease is the sunsetting of the ASEP program, which is the Aboriginal Skills and Employment Partnership. It is sunsetting in March this year. That represents about 42. There is also a small decline in the $16 billion in the Youth Employment Strategy programming. It is also being reduced following a strategic review decision, which is compensated by an increase in the Skills and Partnership Fund, which increased by $16 million. Basically, that increase for this year is a re-pooling of money not spent in this fiscal year to next year, and also another small adjustment to other programming.
Senator Buth: Can you give me more information or describe the AESP, is it?
Mr. Beauséjour: The Aboriginal Skills and Employment Partnership, or ASEP. That is ongoing for a number of years. It was the last year during which that program ran. It basically sunset; it was not renewed. In the future, most of the programming under that will continue under the Skills and Partnership Fund that does similar programming to support Aboriginal partnerships.
Senator Buth: Where would that the strategic partnership occur in here?
Mr. Beauséjour: As I said, the big amount represented for next year — the full $570 billion — includes all these programs. That broad category includes five of six different programs, which is all only one line item in the Main Estimates.
Senator Callbeck: Thank you for coming this morning. First, I want to ask about youth employment centres. I do not see anything in here about those. I understand the government has said it will cancel youth employment centres; is that correct?
The Chair: I am glad you brought Team B with you. Ms. Fisher, thank you.
Cheryl Fisher, A/Assistant Deputy Minister, Service Canada: Last year we had about 100 youth employment centres that were set up separately from our Service Canada centres across the country.
Senator Callbeck: Are you cancelling those plus the ones that are set up by the centres?
Ms. Fisher: This year we are modernizing how we provide services to youth, and we are moving the services that youth need for employment and getting to work in the summer to our youth.gc.ca website. There we will have resumé- writing and career-building tools, and they will have access to the Job Bank.
The in-person centres that we used to operate, using hired students to help students in the summer, will not open this year. However, youth will still be able to get service by visiting any Service Canada centre.
Senator Callbeck: Do you have any figures to show that the number of students going to these youth centres is dropping?
Ms. Fisher: Yes, we do. On average, the youth centres received about six students a day.
Senator Callbeck: Six students a day?
Ms. Fisher: Six students a day visited in person, yes.
Senator Callbeck: Was that last year?
Ms. Fisher: Yes.
Senator Callbeck: We have youth unemployment at 14.7 per cent. The employment rate has gone down the last five months. They are having a tough time getting a job. Now you are telling me that you have to go on a website or go to a Service Canada centre. Is there a separate division within that centre for them?
Ms. Fisher: We have a number of strategies to help youth who visit the centres. They would have all of the online tools that are available. There is an online job bank available, and the people in our centres are very helpful with any of the needs that present and students would have access to that.
Senator Callbeck: Are there no particular personnel that deal with youth who go in with the adults? There is nothing separate for them; is there?
Ms. Fisher: Our Service Canada staff are expert at serving all citizens, and the students who used to help students were very helpful, but now they will have access to trained Service Canada centre staff to be able to respond to their needs.
Senator Callbeck: Therefore, there is nothing special there for youth, even though the unemployment rate is 14.7 per cent.
Ms. Fisher: We have done a lot to bolster the youth.gc.ca website, and there are all kinds of specialized and helpful tools that are available to them anywhere and anytime, not just in a Service Canada centre, but they also have access to that online.
The youth have told us that they would prefer being served online. They like access online, and that is the strategy that we are pursuing for them, but they can still have access to trained personnel in our Service Canada centres.
Mr. Beauséjour: The youth centre was serving a special population during the summertime. In general, the federal government still has the same program as they had before, like Skills Link, that provide money to communities to help youth at risk to facilitate either their return to education or to gain an attachment to work. Those programs will continue.
We do provide a significant amount of money to the provincial government for them to provide training if needed, and youth often go to work with the provincial government to have their skills upgraded, so that money that is transferred to the provincial government. We still have youth programming that supports the youth population in regaining employment.
Senator Callbeck: The bottom line is youth employment centres will be closed.
I am at page 173, five from the bottom, grants for voluntary sector organizations for adult literacy and essential skills.
You probably do not have the information here, but I would like to know how that $18 million was given out, province by province. How is it given out? Is it first-come first-served? Is so much given to every province? Is it the best projects? I would like to know the criteria.
Mr. Beauséjour: The way we usually allocate the money is some money is provided to core funding to some organizations that are in each province. I do not have the specific breakdown, but it can be provided. We give the money based on call for concept or call for proposal, and in that case, it is based on the best proposal that we receive.
Senator Callbeck: Would you get me the figures, then, and the criteria?
Mr. Beauséjour: Yes.
Senator Callbeck: Thank you. On the top of page 175, I would like to get the same information. It is regarding contributions to voluntary sectors. It is for adult learning, literacy and essential skills. I would like to have the list of who the grants were given to and the criteria that you used.
Down below, under "Transfer Payments No Longer Required,'' the Apprenticeship Incentive Grant and Apprenticeship Completion Grant are no longer. Why is that?
Mr. Beauséjour: If you look before the line, at page 173, we have now the line called "Apprenticeship Grants,'' and last year as part of the sup B, we had the request to have those two grants merged together. That is for greater flexibility to ensure the money can be used either for one or the other grants.
Senator Callbeck: Where are they now?
Mr. Beauséjour: It is at page 173, called "Apprenticeship Grants,'' about the sixth or seventh line. It is all the statutory programs in one.
Senator Callbeck: Yes.
Mr. Beauséjour: It would be tab 7, on page 173. That is called the partition plan.
Senator Callbeck: That is less money.
Mr. Beauséjour: Yes, it is part of the strategy to reduce the amount because the amount was not used. Right now, we have spent less. Last year, we spent $10 million, if I am right, and the total authority was 115.
Senator Callbeck: The other question I want to ask about is on the OAS. There are people who are not getting the OAS, and they are not getting the Guaranteed Income Supplement. I know that the department is aware of this. I know that a report done by your department in 2009, or it was commissioned by the department, said 125,000 are not receiving the OAS; 33,000 are not receiving OAS allowance; and 15,000 are not receiving OAS survivor allowance. I know there are thousands that are not getting the guaranteed income supplement. Those are people who really need the money.
Now, is the department looking at this to see what can be done about it?
Mr. Paquette: The answer is yes. In some cases, it is not clear why people are not receiving these benefits, and we are trying to pursue a constant strategy to reach out to these people. We are talking about a different benefit under OAS. There have been some discussions in the context of the FPT ministerial meeting of ministers responsible for seniors with the provinces to see how we can share information in order for us and, in some cases, the provinces to be able to reach the people who seem to be outside of the system.
It is easier for us when people are filing tax reports because then we have information and know where to go. It is when they do not fill out tax reports that we do not have a hook to be able to communicate with them. I can invite my colleague from Service Canada to explain some of the specific things we have been doing in the course of the last few years.
Mr. Thompson: We have extensive efforts to try to increase the take-up for OAS and GIS. Every year we send out more "presumptive applications'' to people that we think are eligible based on our existing records.
In 2010-11, we sent over 350,000 applications out to people age 64. We are doing more of that as well as active outreach to meet seniors where they live. We have mobile outreach capacity through Service Canada centres to promote take-up of OAS and GIS. With GIS, there is no longer a requirement to apply each year. There is automatic renewal based on information we have from the Canada Revenue Agency, so that is another improvement that has been introduced recently.
Senator Callbeck: In Quebec, I understand the number of people eligible and not receiving the Guaranteed Income Supplement is practically zero. Have you looked at what Quebec is doing?
Mr. Paquette: I do not believe that the number is zero in Quebec. I think there is an issue in Quebec, as in other places. Part of the discussion we are having with the provinces is the assumption that people who will be eligible for GIS are most likely low-income seniors. We are trying to get more information about who is on social assistance at age 64, who will become eligible then, and that is some of the type of information, including merging our efforts. Some of the provinces are doing some outreach, so whoever is doing outreach in the federal or provincial governments, we are trying to bring back information for the other level of government in order to achieve that. In Quebec there is an issue as well, as for the other provinces.
Senator Callbeck: I suggest you look at the Quebec figures. I have not got them here, but I know I looked at them probably a couple of years ago, and I was just stunned at the difference between the number of people not getting the Guaranteed Income Supplement there and the rest of Canada. There is a huge difference.
You are looking into some ways to try to get money to these, for example, 125,000 who are not receiving the OAS and the 33,000 who are not getting OAS allowance and so on. Will the government report at any time as to how it is doing? I have been on this issue for several years, and to tell you the truth, I have not seen any improvement. You say you are reaching out and so on, but how do we know you are? I take you at your word that you are.
Mr. Paquette: I will say a few things on this because it is complex and not an easy matter to solve. In some cases we do reach people to offer the benefit and they turn it down. In other words, in the percentage of people not receiving it, some are eligible and not taking it. It is not a high percentage, but there is also that. That is why I was saying sometimes we are not sure we understand all the reasons but there must be reasons.
The other thing is it is a moving population and what I mean is each year there are new eligible people because they have reached 65 years of age. That is why we have to restart every time and have to keep the pressure on in order to reach these people, and the problem is fundamentally that a part of this population is outside of the traceable system.
At the beginning I was saying when you do file a tax report then CRA has that information, and we can use that information and reach the people. When they are not filing a tax report, then we do not know who they are and where they are, and that is our main challenge. It is literally knocking on doors, going out to communities and so on and trying to identify who is eligible and should receive the benefit. These efforts have to be redone every single year because there is a new population coming, and also as I said, some are really difficult to reach.
[Translation]
Senator Hervieux-Payette: A supplementary question. Do you have access to the sickness benefits data, or is that not possible? To my knowledge, seniors see doctors more often and, therefore, use their health card more often. Furthermore, the cards are renewable. In order to find these people, do you have an agreement in place with the provinces to that end? I am obviously familiar with the Quebec health care system, but I suppose that the same thing exists in all provinces. Are other data banks used?
Mr. Paquette: Discussions are being held with the provinces to determine the extent to which we can share information. In some cases, there are privacy issues. Depending on the legislation, we are not necessarily able to merge or exchange certain data because of specific types of information. That said the work is being done. One question pertained to how two jurisdictions can share information to help us better focus our efforts. However, there are challenges with regard to protecting personal information.
Senator Hervieux-Payette: Therefore, it is not happening at this time.
Mr. Paquette: At this point, if you are asking if Quebec, for example, is providing access to its sickness insurance data bank, the answer is no.
[English]
Senator Nancy Ruth: Just to help me clarify, on page 173, this is education. The Canada Education Savings Grant shows $730 million to the "trustees on behalf of.'' I assume the trustees are banks and so on. Are we giving $730 million to banks in advertising? What is this number?
Marc LeBrun, Director General, Canada Student Loans Program, Human Resources and Skills Development Canada: The amounts that are you referencing in terms of payments to RESP trustees, they are in fact financial institutions that hold the money in trust for those families who have saved for their children's post-secondary education. It is not for advertising. It is actually the federal grant, if you will, that sits in the account in trust.
Senator Nancy Ruth: Do we match dollar for dollar or what is this?
Mr. LeBrun: No, the basic grant program is twenty cents on the dollar. It was introduced in 1998. A family contributes up to $2,500 a year and they can attract 20 per cent in grants.
Senator Nancy Ruth: Further on education, page 172, under "Social Development,'' there are both budgetary and non-budgetary items for learning under the heading of "a skilled, adaptable and inclusive labour force, and an efficient labour market.'' The budgetary amount I assume is mostly transfer payments of $1.8 billion out of the $1.972 billion; and the second is for $809 billion, and it is at the bottom of the page under "Learning.''
Can you tell me what grants and contributions are in these two learning baskets? Are you able to identify who benefits from these funds? Do you know who the final beneficiaries are; and when you are making this plan for this number, do you use the federal employment equity grounds such as women, Aboriginals, people with disabilities, members of visible minorities; and thirdly, to what extent do you apply affirmative action principles when designing these learning programs and how do you use tools like gender-based analysis when you make these decisions?
I want to add on to that. Senator Callbeck's question on grants to voluntary sector organizations for adult literacy and essential skills, is that mainly for immigrants and immigrant women?
Mr. Tsang: I will begin with the references to page 172 on the learning. The way the table on page 172 is presented is just a different way of by what we call program activity. The numbers that you quoted includes, if you swing over to page 173, all the items for Canada Education Savings Grant, Canada Student Grants Program, Canada Learning Bond. All the learning items are what make up those numbers under "Learning'' on page 172.
Mr. LeBrun: In terms of your question about access or gender-based analysis, certainly all the programs Mr. Tsang mentioned, the education savings grant program, learning bonds, Canada Student Grants Program, are all statutory based, based on applications. Everyone who is eligible would benefit from these programs. We look at take-up rates. We certainly look at gender-based analysis, and whenever these programs were developed or modified, we certainly looked at participation rates on all fronts.
Senator Nancy Ruth: Can you send me the take-up rates, broken down by the categories that federal employment equity uses?
Mr. LeBrun: Yes.
Senator Nancy Ruth: It does impact that.
Mr. Beauséjour: I can answer the question as it relates to the grants for voluntary sector organizations for adult literacy and essential skills. It is not necessarily targeted to immigrants. It covers all of the Canadian population. Part of it could be to the voluntary sector that supports immigrants to acquire the essential skills to work in Canada to maintain employment, but it is not necessarily dedicated for immigrants.
Senator Nancy Ruth: Does Immigration Canada also have educational grants?
Mr. Beauséjour: I suspect no. They have programs for settlement that help people settle, but it is not related to training per se.
Senator Nancy Ruth: Do we still give free language classes in French and English to immigrants, and where would the budget item for that be?
Mr. Beauséjour: I think that could be one the specific three that could be provided through CIC as part of the settlement.
Senator Nancy Ruth: On page 173, I note an increase of $2.2 million in grants to homelessness. We had a question already about homelessness. Refresh my mind though, and tell me what other amounts HRSDC spends on homelessness apart from Canada Mortgage and Housing Corporation?
Mr. Paquette: Yes, there is the Homelessness Partnering Strategy that is being done at the national and regional level. In the Main Estimates you have $126 million listed in the current budget for the next fiscal year.
Senator Nancy Ruth: These partnerships are mainly with provinces or municipalities?
Mr. Paquette: Mainly with municipalities. I would say the bulk of the grants and contributions of this program are done with a total of 62 designated communities, which are the main cities across the country. We do not necessarily deal directly with the city. Sometimes they have a board in place that brings in together different players, including the city. In some cases, they develop a plan for addressing homelessness within the community, they will submit the plan and we will look at it and approve it. If it is approved, we will give the money to the community advisory board. They are the ones who will deal with the projects and implement the plan.
Senator Nancy Ruth: Are the community advisory boards usually within municipalities?
Mr. Paquette: They include representatives from the municipalities, but not exclusively.
Senator Nancy Ruth: Does the municipality also have to match the grant, or is this straight federal funding?
Mr. Paquette: What we have seen is for each dollar that the federal government invests through this strategy, there is another $3 being put in by communities, private sector, not-for-profit, and so on. This fund really serves to leverage some other funds, but also to facilitate a coordinated approach in a given community to help address homelessness.
Senator Nancy Ruth: Could a community access these funds without having the $3 matching?
Mr. Paquette: Yes. The HPS is not based on matching of funds. However, the reality is that because we are putting the money on the table it is facilitating the gathering —
Senator Nancy Ruth: They use that as a mechanism.
Mr. Paquette: Absolutely.
Senator Neufeld: Back to your explanation, you said 63 cities across Canada?
Mr. Paquette: There are 62 designated communities.
Senator Neufeld: Can you give the clerk the name of those cities, please?
Mr. Paquette: Sure. Some additional information is there are 62 designated communities, but we also have funds put aside for rural and remote communities. We want to ensure — because there are homeless problems in these communities, even if they are smaller — there is a fund specifically for them as well.
Senator Neufeld: If you could add that to the information you can provide to the clerk, and how that is distributed, that would be great.
Senator Nancy Ruth: Is that fund on the top of the $126 million, or within it?
Mr. Paquette: It is within the amount here. The bulk of the grants and contributions are for the 62 communities, but there is also additional money for remote and rural.
Senator Finley: With Senator Peterson's question we established what the Canada Mortgage and Housing Corporation does. However, this increase of $232,389,000 is a pretty expensive initiative, one would think. How much of this is new housing and how much is the refurbishing of existing assets?
Mr. Joyal: This is the extension of the program announced in 2008. There $253.1 million extended for another three years. We did appear in front of this committee through the Supplementary Estimates (A) and that went through all of the explanation. That funding addressed three parts. There is a part going to the affordable housing initiative that is mainly delivered by the province. There is a part that goes on the on reserve, and there is a part for repair and renovation. I do not have the detailed breakdown of that $253 million by each of those components with me, but will be glad to provide that to you.
Senator Finley: Yes, please I would appreciate that.
Gentlemen, several times you mentioned strategic review. I assume that is your ongoing internal departmental strategic review as opposed to at the Strategic Operating Review Committee, which is a completely different kettle of fish.
Mr. Tsang: That is indeed correct.
Senator Finley: Your department is also, if memory serves me well, responsible for the ministries of labour, seniors, and the status of women. Of the total operating budget for a moment, is it possible to have provided — you may not have it here — the amount of money expended operationally on the various sub-ministries that you have? In other words: seniors, labour and status of women?
Also, in your breakdown — particularly of transfer payments and grants and contributions — I have a bit of a problem determining under which of those groups manages the whole issue. Perhaps it is HRSDC. How much money does, for example the Minister of Labour manage in terms of programs, transfers, contributions? How much to seniors and how much to status of women?
I am not looking for you to do it right now, but could you provide a summary as to where each of these large chunks of money goes?
Mr. Paquette: Could I ask you a question about your question?
Senator Finley: Yes, sure.
Mr. Paquette: Labour is an entity within the portfolio, but as you pointed out it is separate. Status of Women Canada is an agency as well, but Seniors Canada is an integral part of the mandate of HRSDC. It is fully integrated in the way the department is functioning with different sources of funds, because the benefits for CPP are a specific source of funds.
For the rest, for example, in the Main Estimates, there is a program called New Horizons for Seniors. That is for seniors but it is administered by HRSDC, like any other program. For your question about seniors, do you want to identify all the programs that are specifically related to seniors within HRSDC?
Senator Finley: Yes. If you could do that, I would appreciate that.
The Chair: Mr. Joyal, there was an article recently in one of Canada's national newspapers about the International Monetary Fund calling for a review of Canada Mortgage and Housing Corporation's risk management. That is a result of what has happened in the United States with the real estate bubble and lending down there. The C.D. Howe Institute has also suggested that there should be fundamental governance changes at CMHC.
Is there any activity going on at CMHC now to improve governance, risk management and oversight as called for in this article?
Mr. Joyal: At CMHC we spend a lot of time and effort to assess our risk management and governance practices. In the Auditor General's special examination in 2009, they reviewed all of our practices and issued a very good report for us in terms of our practices, governance and activities.
Of course, we are always looking for improvement and it is an ongoing process for us to look for how we can improve our risk management and governance practices.
The Chair: You basically reject what this article from the International Monetary Fund and the C.D. Howe Institute are saying and that you are doing fine. Is that what you are telling us in this answer?
Mr. Joyal: What I am saying is that we are always looking for improvement, which is part of our ongoing activity. There is no specific action we do as related to the IMF article per se, but we do look at improvements and we do so as part of our rigorous process.
The Chair: Obviously, time will not permit us to delve into this warning by the International Monetary Fund and by C.D. Howe in relation to CMHC, but it may be something that this committee might want to look into more thoroughly with a full session with CMHC.
We have two minutes left in round two. If you could undertake to provide us with a written answer, that would be appreciated.
Senator Ringuette: I have with me Supplementary Estimates (C), which we completed last week. In Supplementary Estimates (C), with regard to OAS, there was a reduction of $410 million, bringing the program estimates for last year at $28,751,000. Here in the Main Estimates, you are taking last year's full estimates with almost half a billion reduction and you are increasing. For the life of me, I cannot understand why last year there was a reduction of half a billion dollars and you are estimating here an increase of $2 billion, which is an increase of 9.3 per cent of that item.
With regard to last year, I look at the Canada disability savings. Looking at Supplementary Estimates (C), the total spent was $99 million. Here, you are not going to the base budget of last year, which is $63.8 million. I do not understand why there should be such a discrepancy between Supplementary Estimates (C) and your Main Estimates.
My other question is with regard to CMHC, on page 179, where you indicate strengthen competitiveness and innovation of the housing sector in order to meet the housing needs of Canadians. Insured mortgage purchase program is almost nil. Does that mean you are going out of this program and leaving this to the private sector only?
Senator Buth: Like Senator Finley, perhaps you can just pull any information out of here and report back to the clerk. I would like to understand the difference between the Canada Student Loans Act and the Canada Student Financial Assistance Act. If you could pull out of the program what the various estimates are for programs for students, I would appreciate that.
Senator Peterson: It is my understanding that CMHC is close to or has hit the ceiling on mortgage insurance underwritings. What is your definition of "affordable housing''? What do you mean by that? Is it a certain segment of the population, the type of construction of shelter, the cost, or what is it? What is the box that is affordable housing?
The Chair: We have quite a number of questions. I hope you can provide us with written answers on a fairly timely basis because it is important we reflect your position in our report.
On behalf of the Standing Senate Committee on National Finance, I thank each of you for being here and helping us with a number of points. We just dealt with your department in relation to the Supplementary Estimates (C), which closes off this fiscal year we are in. As of April 1, we will be working on the next fiscal year. We may decide to pursue some of these issues again. We are charged with following through on the estimates throughout the year. Thank you very much.
We are continuing our look at the Main Estimates for fiscal year 2012-13. In our second session this morning, we are pleased to welcome officials from Public Works and Government Services Canada; Shared Services Canada, which is the new initiative we learned about last week; and Natural Resources Canada.
Appearing from Public Works and Government Services Canada are Andrew Treusch, Associate Deputy Minister; and Alex Lakroni, Chief Financial Officer. From Shared Services Canada, we welcome Maurice Chénier, Senior Assistant Deputy Minister, Projects & Client Relationships; and Gina Rallis, Senior Assistant Deputy Minister, Corporate Services. On behalf of Natural Resources Canada, I am very pleased to welcome Serge Dupont, Deputy Minister; and Bill Merklinger, Assistant Deputy Minister, Corporate Managements and Services Sector.
Mr. Treusch, I believe you have a brief opening statement. You have the floor, sir.
Andrew Treusch, Associate Deputy Minister, Public Works and Government Services Canada: Thank you, Mr. Chair and members of the committee. It is an honour to be here today.
[Translation]
I am pleased to be here today to discuss the Main Estimates for Public Works and Government Services Canada.
[English]
I would like to introduce Mr. Alex Lakroni, Chief Financial Officer. He joins me here today.
PWGSC plays an important role in the daily operations of the Government of Canada. We are its principal banker, accountant, central purchasing agent, linguistic authority, and real property manager. In this, we manage a diverse real estate portfolio that accommodates 269,000 federal employees in 1,849 locations across Canada.
[Translation]
We contribute more than $14 billion annually to the Canadian economy through government procurement. We prepare the annual Public Accounts of Canada and manage a cash flow of more than $2 trillion a year.
[English]
We translate more than 1 million pages of text on behalf of federal organizations, and provide translation and interpretation services for Parliament and its committees, including this one.
PWGSC's Main Estimates for the year approaching 2012-13 totals $5.6 billion. This is a decrease of $218 million, or 8 per cent, over last year. This is primarily due to the transfer of funds to Shared Services Canada, as well as our strategic review exercise, under which Public Works and Government Services Canada contributes to deficit reduction.
[Translation]
Of note, PWGSC has been very successful in minimizing the impacts on the employees affected last year as part of the strategic review. To date, 88 per cent of those employees have secured new employment.
[English]
In other words, of the 303 employees affected by strategic review in the year past in our department, we have already placed 270 in alternate employment with the Government of Canada.
Of the $5.6 billion budget before you in the Main Estimates, $2.3 billion is required to pay for rent, fit-up and utilities for government-wide accommodation; Receiver General Treasury functions, such as banking fees paid to financial institutions, goods such as cheques and envelopes; and translation services to Parliament. As well, $2.1 billion is related to provision of service to client departments on a fee-for-service basis, such as real property advisory, project delivery, property and facility management, and again translation services.
[Translation]
An amount of $0.8 billion is needed to deliver on our core programs, such as central purchasing and banking, services pertaining to public accounts, and payroll and pension services.
[English]
In addition, $289 million in capital is invested in Government of Canada buildings and infrastructure.
I would like to underscore the fact that PWGSC earns $3.3 billion in revenues from client departments. This is 59 per cent of our total budget in providing these services to client departments. This leaves Parliament to approve a net appropriation of $2.4 billion. In other words, the majority of our costs are in fact recovered from client departments.
[Translation]
Before I conclude, I would like to highlight a few of PWGSC's key achievements.
[English]
We are very proud of our work in the development and implementation of the National Shipbuilding Procurement Strategy announced last year. As you know, two shipyards were selected, following a fair, open and transparent process, free of political interference. We had independent oversight provided by a fairness monitor and the assistance of independent third-party subject matter experts in this domain.
With this strategy, we are poised to create thousands of jobs in shipbuilding and related industries from coast to coast to coast.
[Translation]
We are also very proud of our Canadian Innovation and Commercialization Program, an initiative to help kick- start Canadian businesses. This program is helping businesses bridge the gap between the lab and the marketplace, with 27 innovations prequalifying in its first round, and 36 in the second.
[English]
I am also pleased to note that we are moving forward with the establishment of a Pay Centre of Expertise in Miramichi that will ensure the long-term sustainability of the Government of Canada's pay administration and provide services in a more efficient and effective way to the public service.
[Translation]
In addition, PWGSC was recently designated as one of the National Capital Region's Top Employers.
[English]
Our department was also the winner in the 2012 Canada's Best Diversity Employers competition.
This concludes my opening statement and we would be very pleased to answer your questions.
Gina Rallis, Senior Assistant Deputy Minister, Corporate Services, Shared Services Canada: Shared Services Canada was created on August 4, 2011, with a mandate to streamline and reduce duplication in Government of Canada Information Technology infrastructure services, to modernize the way we deliver services to Canadians, and improve the security of federal IT infrastructure.
This department is about building a critical mass of IT expertise within a single, consolidated organization. On August 4, 2011, under the first order-in-council, approximately 1,300 employees from the Information Technology Services Branch of Public Works and Government Services Canada were transferred to a new entity, Shared Services Canada. The August order-in-council also transferred responsibility for email, data centre, and network services to Shared Services Canada.
[Translation]
The second Order-in-Council on November 15, 2011, prompted the transfer of approximately 5,000 employees delivering network and data services and support staff from 42 partner departments and agencies. The department is responsible for a total budget of $1.8 billion, made up of revenue and appropriations transferred from partner departments, which supports the delivery of email, data centre and network services for the 43 most IT-intensive organizations in the Government of Canada.
The Government of Canada is building on proven models. Consolidating and streamlining email, data centre and network services will improve service while reducing costs. Other governments and private sector companies have demonstrated that streamlining and consolidating in the areas of email, data centres and telecommunications leads to reduced costs. We know that the provinces of British Columbia and Ontario, and private sector companies, including Hewlett Packard, have reported significant savings by taking a consolidated approach, which is now becoming an industry standard.
[English]
We are committed to ensuring that this initiative provides better value for money from IT services across the federal government. Some of the benefits of consolidating across 43 departments are immediate, and we can harvest those savings in our efforts to reduce costs. In order for Shared Services Canada to identify projected savings, detailed transformation business cases will need to be developed and approved.
The department is responsible for a total budget of $1.8 billion made up of revenues and appropriations transferred from partner departments, which support the delivery of email, data centre and network services for the 43 most IT intensive organizations in the Government of Canada.
Shared Services Canada has also engaged with the information and communications technology sector with a view to establishing a sustainable and substantive relationship with the private sector. A first round of consultations with key ICT sector associations has taken place with discussions touching on the role of Canadian small and medium sized enterprises, the importance of innovation and best practices with respect to sourcing and procurement.
Turning to 2012-13, Parliament is being asked to approve approximately $1.4 billion in net spending authority for the new Shared Services Canada vote in the Main Estimates, which is entirely made up of appropriations that have been transferred from its 43 partner departments and agencies.
These funds will be used to continue the delivery of existing email, data centre and network services to 43 federal organizations. In addition, Shared Services Canada will continue to advance the early stages of its eight-year transformation plan to modernize IT infrastructure services and will fund the necessary investments using internal savings achieved through consolidation and harmonization of existing operations.
In conclusion, Shared Services Canada will begin its first full fiscal year firmly focused on its objective to be a modern public service organization that is fiscally prudent, lean and responsive to the needs and expectations of Canadian taxpayers. Thank you.
The Chair: Thank you. Next is Mr. Dupont from Natural Resources Canada.
[Translation]
Serge Dupont, Deputy Minister, Natural Resources Canada: Honourable senators, thank you for inviting us to appear before the committee today. We have distributed our talking points and I will quickly summarize them to allow more time for questions.
Under its Main Estimates, it is proposed that NRCan be authorized to spend $2.81 billion in 2012-13. This amount represents a reduction of $712 million, or 20 per cent, with respect to the Main Estimates for 2011-12. There are a number of factors, both pluses and minuses, that have contributed to this reduction and I will endeavour to provide a brief explanation.
[English]
The $2.8 billion of proposed spending for 2012-13 for NRCan may be separated into three major categories of expenditures. About 40 per cent, or $1.12 billion, are statutory payments to the provinces of Newfoundland and Labrador and Nova Scotia under the offshore accords. This allows revenue from oil and gas activity offshore to be earned by the provinces as if the resources were onshore. The amounts vary from year to year based on projected and realized resource production and prices.
About 32 per cent of the budget, or $892 million, are grants and contributions paid under different statutory or program authorities. These amounts also vary from year to year according to the planned and realized profile of spending under initiatives that are generally time limited.
Finally, about 28 per cent of the spending, or $778 million, comprise the operating expenditures of the department, including salaries, benefits and other operating and maintenance costs. For NRCan, these amounts also fluctuate from year to year because of the time-limited nature of a large proportion of our spending.
The comparison of expenditure authorities from year to year is complicated somewhat, as I am sure senators will appreciate, by the nature of the budget cycle and by the way the resources are voted by Parliament through the course of the fiscal year.
Let me place into context, accordingly, the key changes this year.
Page 257 of the Main Estimates identifies key items, increases and decreases, and explains the net 20 per cent reduction relative to 2011-12 Main Estimates.
Increases on the positive side arise from a number of factors. For example, a $137.6 million increase related to the Nuclear Legacy Liabilities Program, under which monies are paid to Atomic Energy of Canada Limited for management of legacy waste, is explained largely by the fact that last year, the corresponding amount, $129 million, was included in Supplementary Estimates (A).
Similarly, monies for programs launched or renewed in Budget 2011 for energy innovation and energy efficiency were recorded in supplementary estimates for 2011-12.
Other increases, for example, for the Clean Energy Fund and Sustainable Development Technology Canada, arise not from program growth but from the re-profiling of monies from prior years to align better with actual year-to-year investment opportunities.
On the other hand, an increase of $20.8 million for the Port Hope area initiative does represent actual growth in activity as the clean-up of radioactive waste and contaminated soils in that community now proceeds from the planning to the implementation phase.
[Translation]
Similarly, a number of factors have led to a reduction of expenses relative to the 2011-12 Main Estimates. A decrease of approximately $500 million related to the Pulp and Paper Green Transformation Program is due to the sunset on March 31, 2012, of this successful, three-year, $1 billion program to improve the environmental performance of the pulp and paper industry. A decrease of $436 million in payments to the Newfoundland Offshore Petroleum Resource Revenue Fund, relative to the 2011-12 Main Estimates, in fact brings projected payments for 2012-13 roughly in line with final authorities for 2011-12.
Finally, a decrease of $22 million related to the eco-ENERGY for Biofuels program reflects the year-to-year profile of this eight-year subsidy program.
[English]
Working together with a wide range of partners in government, industry and academia, NRCan manages these financial flows with a keen sense of discipline and opportunity in an economy affording exceptional scope for positive contributions to growth and jobs from our natural resource sector.
Our staff is proud, engaged and committed. We will continue to support the government's agenda of economic growth and jobs in the domains of energy, mining, forestry and earth sciences, including by exerting leadership for an improved regulatory system through the Major Projects Management Office.
[Translation]
With regard to NRCan's agency portfolio, the allocations are at similar levels to last year's Main Estimates with the exception of Atomic Energy of Canada Limited. The proposed AECL appropriation includes the base $102 million for ongoing operations at the nuclear laboratories, and $275 million to address obligations that existed prior to the sale of CANDU Reactor Division to SNC-Lavalin Nuclear. That transaction closed in October 2011. Commercial risks related to future contracts of the new CANDU Energy will be borne by its private sector owner and no longer will represent downside exposure for Canadian taxpayers.
With apologies for the somewhat dry character of this presentation, I will welcome, Chairman, questions from the honourable senators.
[English]
The Chair: Thank you, Mr. Dupont. I have an extensive list of senators who wish to participate. We anticipated this difficulty. We can always ask any department to come back at another time, so I would ask each senator to restrict your questions to the subject at hand, which is the Main Estimates. I will try and keep each senator, with the question and answer, to a five-minute time limit.
Senator Neufeld: Thank you for being here. I will attempt to be as quick as I possibly can, chair.
I am interested on page 260, to Mr. Dupont, about the estimates that were made in regard to what would be paid to both Newfoundland Offshore Petroleum Resource Revenue Fund, as well as Nova Scotia. There is quite a discrepancy in what was estimated and actually paid. Is that because there was lower production? The prices have actually gone up, to my knowledge anyhow, in oil. Obviously down in gas, but certainly up in oil, so if it works like most royalties, the dollar amount would go up, so it must be something to do with production? Would that be correct?
Mr. Dupont: I think so, senator. As I indicated in my remarks, the number for 2011-12 is adjusted in the Supplementary Estimates (C) for 2012 to roughly the amount for 2012-13. We are actually seeing something constant at around the $1 billion range. The $1.4 was overestimated. There is currently some maintenance of some platform and production in Newfoundland that has and will be affecting production over the course of those two years.
Senator Neufeld: The $275 million to address the obligations that existed prior to the sale of CANDU Reactor Division, my understanding from this item is this is the final? Is that the end of it? You are smiling a bit.
Mr. Dupont: We are getting close.
Senator Neufeld: I understand it may not be the end of it.
Mr. Dupont: We are getting close. Essentially the end of it will be determined when all of the projects undertaken by CANDU under the previous ownership are complete, that is the retrofit projects at Point Lepreau, at Bruce and eventually maybe Gentilly too, which is one of the contracts that had been signed by the former entity. Until all of these are out of the system, there may still be some expenditures related to those because those remain the responsibility ultimately of Atomic Energy of Canada Limited.
Senator Neufeld: I guess we expect you will be coming back for some more.
The legacy liabilities program will always stay, will it?
Mr. Dupont: I think it is a 75-year program, which is basically to ensure the long-term and ultimate permanent disposal/decommissioning of all of the facilities in the AECL facilities, including Manitoba and Chalk River.
Senator Neufeld: To Ms. Rallis, the work you are doing — I know in British Columbia it is still ongoing — takes a long time, but it is certainly worthwhile. We found that there were systems that could not talk to one another in government. I assume that same thing has happened in the federal government when each department, or whatever, could make their own decisions on what equipment to buy.
Do I understand that the plan is within eight years to modernize in these 43 departments, get them all on the same playing field so they can all talk to one another and they all have the same systems and can be monitored? Is that the ultimate goal at the end of the day? It is a very good project. I am certainly not questioning you. I think it is great. It is a lot of work.
Ms. Rallis: Thank you for the question. We are extremely fortunate to be able to learn from other jurisdictions that have gone ahead of us, like British Columbia and Ontario. We have a focused mandate in terms of consolidating and modernizing IT infrastructure services. As you can appreciate, when we look at data centres, we have inherited over 300. We believe we can go to less than 20. That is an eight-year initiative. It is complex, and so our first priority is consolidation of the IT infrastructure services and assets we have inherited.
The first one, however, to answer your precise question, is we believe that the email transformation moving from 63 different email applications that we have now in scope from the 43 departments to one email system for those 43 partner departments could be done as the first transformation initiative, and we have set ourselves a three-year time frame to do that.
Senator Neufeld: Could you provide to the clerk for all of us the 43 departments that are involved?
Ms. Rallis: With pleasure.
Senator Neufeld: Thank you very much.
The Chair: Ms. Rallis, can you tell me if Shared Services Canada will in the future be sheltered under Public Works and Government Services Canada, or do you anticipate that you might be spun off and have your own page?
Ms. Rallis: First, Shared Services Canada has been created as an independent department.
The Chair: That is what I understood.
Ms. Rallis: We are under the portfolio of Public Works and Government Services Canada, and our minister is the Honourable Minister Rona Ambrose. While we are independent, we are part of the portfolio of Public Works and Government Services Canada.
The Chair: The Deputy Minister of Public Works and Government Services Canada has under his or her umbrella your department, or do you report directly up to the minister?
Ms. Rallis: An independent department, as an official I report to Liseanne Forand President of Shared Services Canada, who in turn reports to the minister.
The Chair: President?
Ms. Rallis: That is correct.
The Chair: Thank you. Senator Finley?
Senator Finley: I hardly know where to start.
The Chair: You have to keep it within five minutes.
Senator Finley: Can I get a callback in five minutes?
First, Shared Services Canada sounds a bit like Jim Hacker's Department of Administrative Affairs to me.
We have a statement by PWGSC that says the primary decrease in their operating costs is a transfer of funds to Shared Services Canada, which strikes me as the government giving from the left hand to the right. You think you might be able to combine the email services in three years. With your current or estimated annual budgetary expense of $1.5 billion, that will be $4.5 billion to combine emails as a first step.
Now I know you will be doing other things, but that strikes me as being an absolutely unbelievable amount of money to do this. Is there a detailed breakdown somewhere of the kinds of programs with some specific targets? You say you are going to make business cases for each of the transitions, as I recall; but I do not see an original business case for this. Has an original business case been made?
Ms. Rallis: Thank you for the question. Perhaps I did not communicate my point clearly. The $1.4 billion we are seeking authority for through Main Estimates is first and foremost to continue to provide the IT infrastructure services we inherited from 43 partner departments, which include email data centres and networks. As I have indicated, we currently have across the 43 departments over 63 different and disparate email systems. We have over 300 data centres and about 3,000 networks. Our first priority and mandate is to continue to operate and then look at consolidation followed with transformation.
In terms of our planning, like every department, we are in the last stages of preparing for our reports on plans and priorities which will be our first one that identifies how our priorities and the plans support the mandate we have been given.
We are also starting to do the detailed planning on the transformation initiative, and as I indicated, the first one is email; and in that, in keeping with Treasury Board policies, we have requirements in terms of doing detailed planning and seeking project authorities, which we will be doing as we move forward.
I hope I have addressed your question.
Senator Finley: What is the total? You say you have 63 departments and hundreds of data centres. What is a total cost to the Canadian taxpayer of operating the whole great mass, and what do you think it will actually get managed down to at the end of your five-year or 10-year plan? What is the total of that great big chunk of data services? You must surely know as you are accumulating them all.
Ms. Rallis: Perhaps I can step back in terms of the reports from the Chief Information Officer Branch of the Treasury Board. It is estimated the government spends about $5 billion in terms of IT. Our organization has a very focused mandate. It is on providing IT infrastructure services. This does not include the applications in departments that enable the delivery of their programs and services.
Our experience is that by being focused, and consolidating email data centres and networks, there are dividends to be found. One reason we were created is there are other jurisdictions, like Ontario and the Province of B.C., that have been undertaking it. If I use a concrete example, in terms of their consolidation the Province of Ontario basically indicated that once they get through their consolidation of their IT infrastructure, there is $100 million annually in terms of savings to that province. We are on an eight-year. We have been created in order to deliver on the transformation part of the agenda over an eight year period. Part of that is making sure we have the appropriate detail planning that supports moving out to transform from over 300 to fewer than 20 data centres, as an example that I cited earlier.
Senator Finley: That is a lot of numbers I have to say. Like Senator Neufeld, I agree with the concept completely. Godspeed, and I wish you well.
With respect to Public Works, I have a series of questions on the so-called accommodation premium which keeps popping up. It is 13 per cent of salary level. Can you tell me how that determined? How it was chosen? What was the last time it was re-evaluated? At what point would you look at resetting that number, if at all?
Mr. Treusch: Thank you for the question. The combinations premium of 13 per cent began in 1998-99. It was established by Treasury Board ministers at that time as appropriate benchmark for the accommodation costs that relates then to the number of public servants that we accommodate in our buildings. It is actually reassessed every year through the annual reference level update process. We are challenged by central agencies — by the Treasury Board Secretariat — on it.
On your question senator, the most recent validation was the summer of 2011 — last summer. At that time it was determined that the appropriate ratio was 13.7 per cent, but we continue to be funded at 13 per cent levy. I want to emphasize this is an annual process. We will be subject to the same scrutiny by the Treasury Board Secretariat in the coming summer.
Senator Ringuette: My question is to Public Works. I hope you will be invited back because the small amount of time does not do justice to your expenses.
You have capital expenditures, you state, of $288 million and you state your Main Estimates last year were $344 million. However with A, B and C it ramped up to $514 million. You are looking at almost half a cut in capital expenditure, and I want to know where the cuts are happening. It is the same as in your operating expenditures. The total expense last year was $2.276 billion and you are looking here at $1.9 billion, which is over $300 million. I expect that you will be able to answer all these questions. The major question is: How are you involved in the new DND Nortel complex? Are you? Are you not? If so, how are you involved?
Another question: You state that to date 88 per cent of those employees that lost their jobs last year in your department have new employment. Did I hear you right in saying that there were 300 of them? Have they secured jobs with your suppliers? Under what conditions? When you say employees, were they full-time Public Works employees, contract employees or consultants?
The Chair: Would you like to take a shot at some of those questions? I hope you made note. For ones you do not answer, you can provide an answer in writing.
Mr. Treusch: I will endeavour to do my best to address questions about the capital and operating budget, the purchase of the Carling campus and the employees affected by strategic review.
With respect to our capital budget, I would not characterize them as cuts. We have actually in no cuts to our capital budget. We are a project department. We are different from some others in that we have project undertakings. They have a budget, a start date and end date. There are a lot of hills and valleys in a capital budget like that; you see that.
In our past, we are a major vehicle for the government's Economic Action Plan, with hundreds of millions of dollars through our budget's base. The Economic Action Plan is over and you no longer see those funds running through us.
Parliamentary precinct: a lot of our monies have been committed. You would see them in the prior year, and you will not see them at this time in the coming year. That is a major factor as well. We have a new influx of capital money to address engineering assets, bridges and wharves across Canada, but you do not see those in our base yet. They will be for years to come.
On the operating budget, some of the reductions are the strategic review reductions. However, the biggest number of all is the transfer of our budget to Shared Service Canada of $113 million. In that decline, a large part of it is simply explained by the creation of Shared Service Canada and the transfer of people and accompanying operating resources to them. Public Works and Government Services Canada was responsible for negotiating the purchase of the Carling campus for $208 million. I would be happy to share with the committee the number of real estate experts in the local market that commended us for buying this property at a far better price than we could ever provide the accommodations for.
National Defence, which will be the occupant of this campus, is located in some 48 different sites across Ottawa, many of our leased sites. The economies and efficiencies from locating them on a single secure campus — a campus dedicated to their needs — are obvious. We did our due diligence on the site, including bringing in private sector real estate experts that had tested that we had done our due diligence, made a good purchase and the buildings have been maintained in excellent condition. We continue to work with National Defence on the occupancy plan.
With respect to the employees affected by strategic review last year, yes, 303 employees were affected. These are indeterminate employees of our department. They are not consultants, temporary help or part-time employees. They have all been placed in Government of Canada positions, either with our own department or with others across the Government of Canada. I think that is the case in nearly all instances. A few would have taken retirement, as well.
Senator Buth: First, for Public Works and Government Services Canada, you state that there is a reduction of $75.2 million in funding for the five-year program of work under the Long Term Vision and Plan, which is continued implementation of the LTVP to ensure the Parliament buildings are preserved. Is this undertaking still on budget and on time?
Mr. Treusch: Absolutely; it is. Looking back at a project that we recently completed — the Promenade, just behind us — we came in under budget and completed it on time. At 1 Wellington, the committee facilities were completed on budget and within one year. For the food production facility for Parliament, we came in some $5 million under budget; that is a LEED Gold facility completed on time. The Library of Parliament, which was the first project we completed, was on budget, and we garnered international awards for our work on that structure.
Right now we are at work on the West Block and at 180 Wellington, the Sir John A. Macdonald Building, which you may know as the former Bank of Montreal. We have started some work on East Block; you have seen the cladding there. We have begun work on the Welcome Centre's first phase, which is actually part of the West Block accommodation.
To date, we are on schedule for everything; 81 Wellington is on schedule for 2015. Sir John A. Macdonald is on schedule for 2015. West Block has been accelerated; we were originally targeting 2020 and are now targeting 2017 for that facility.
Senator Buth: West Block is on budget?
Mr. Treusch: On budget and on schedule. At this date, we have committed some $70 million. We are fairly early along with the West Block project. We have done a clean-out of the interior and taken out the hazardous substances. We have done some of the masonry work. We have completed the northwest tower on the exterior. We are at that stage now.
Senator Peterson: Regarding this new entity, Shared Services Canada, I understand you have 6,300 employees and that they transferred those to you from other departments. They have also transferred all their budgets. Therefore, is it safe to say that there will be no net increase in costs to the government and that we can look forward to considerable savings?
Ms. Rallis: This is a machinery of government change, so this is a change that was affected under the Public Service Rearrangement and Transfer of Duties Act and the Financial Administration Act. As you have indicated, it is moving into one organization the people, the resources and the functions that have been currently doing email, data centre and network support to the departments. This does not represent growth in terms of employees or in terms of costs to run the ongoing business.
However, we were really created to generate savings, because there was a belief — proven through other models — that, by bringing together the resources from these 43 organizations and moving from 63 email systems to one, as an example, there are savings and efficiencies to be had. Over the longer term, it is really to modernize the IT infrastructure service.
This does not represent new money.
Senator Peterson: Will the 6,300 employees ever have to be under one roof or can they stay where they are now?
Ms. Rallis: They are embedded and will stay in their current organizations, supporting the departments they have been in. We like to explain it almost like the Department of Justice model, where there are staff from legal services in every department embedded and supporting the departments. We have the same model in that our people who are supporting email, data centres and our networks are still within the 43 departments.
Senator Peterson: Mr. Dupont, on page 260, the budget for Climate Change Adaptation Initiatives changed from $11 million to about $3.5 million at a time when climate change is very much in the public eye. Why would we be going this way, and what have you taken out?
Mr. Dupont: That is the transfer payment component of our effort. We had spent approximately $27 million over a period of five years. We are planning to spend $13 million over the next five years, so it is a diminution.
We worked with what we call collaboratives. We established some groups in all parts of the country, including in the North, to work with different partners to be a bit of conveners of different priorities — municipal governments, industry and others — to look at adaptation challenges from different parts of the country. As we go to the next phase, we will still be working with collaboratives but we will also be working at a reduced level. That is not a reduced level of effort but simply another phase. We are doing that to try to consolidate the information to try to ensure with working group representatives from across the country — business associations, municipalities and so forth — that we have in one place a resident body of knowledge about some of the adaptation challenges, for example, with regard to coastal management and so forth.
We have created through a first phase some of the synergies from different parts of the country for people to come together and discuss those challenges. We now want to bring together the knowledge and establish a platform to bring this together.
I would add that adaptation is embedded in a lot of other work we do. Whether it is in forestry, mining or energy, it is becoming difficult to separate it from our daily activity, because we need to consider the impact of the climate on pretty well all of our operations.
Senator Peterson: Regarding AECL, you say $102 million for ongoing operations at Chalk River. What would that be? Would that be research materials testing? Is it winding down, ramping up or staying the same?
Mr. Dupont: The $102 million is roughly the A-base funding that AECL has been getting for a number of years at that level. It essentially goes to fund the operations of the Chalk River laboratory, which includes, for example, production of medical isotopes and research and development in a range of nuclear science applications.
One must be aware that, over the last 100 years, the appropriation of $102 million has not been sufficient to fully fund the responsibilities of Atomic Energy of Canada Limited at those facilities. Successive budgets have accorded additional authorities voted by Parliament through supplementary estimates for that facility to actually be able to fulfill all of its responsibilities in a safe manner, given its responsibilities for waste management and oversight of considerable facilities over there.
What I am saying is that you will most likely see additional amounts accorded in future supplementary estimates to ensure that AECL is able to fulfill its obligations at the Chalk River site in particular.
Senator Peterson: Yet they do generate revenue. Where does it show up?
Mr. Dupont: They generate some revenue. It does not show up in this particular line here. They generate some revenue from the sale of medical isotopes, and that is taken into account in terms of the overall amount of money that would then be accorded to them through the supplementary estimates process. We are now proceeding to restructuring; we have done the commercial part of the business and we are now focusing on the laboratories.
One would expect that we come to a point where we are able to establish a more permanent A base that would properly reflect the requirements of AECL over time and would deduct any kind of revenue they generate. They typically would have generated around $30 million a year the on the isotopes sales. There is also some revenue from the sales of science and technology services.
Senator Runciman: I have a quick question to Natural Resources Canada and it is regarding ecoENERGY for Renewable Power, $143 million. Is that the end of that program? Is there any consideration of it being extended in the future, that you are aware of?
Mr. Dupont: There are two parts to the answer: We do not expect new contracts to be signed, but they are multi-year contracts with providers of wind power. It was over 14 years, and the contracts extend to 2017, if I am not mistaken. The contracts will provide roughly the equivalent of one cent per kilowatt hour over that period of time to the producers. We are not signing new contracts and new obligations, but there will still be moneys in the estimates from year to year reflecting the actual payout during that year of the subsidy for that actual electricity production.
Senator Runciman: In terms of who the subsidies will flow to, I am looking at the list off the website. Will there not be any additional receivers of federal monies other than those on the list on your website?
Mr. Dupont: I do not have the list with me, but there are 104 projects. With that number, there should not be any more recipients because we essentially have maximized the capacity of that program. It has delivered 4,458 megawatts of capacity, and that basically has fulfilled the goal of the program, which was to promote expansion to 4,000 megawatts. As it stands for us, it is essentially for us to honour our commitments under those contracts.
Senator Runciman: About 40 per cent of these projects seem to be in Ontario, which seems to be a controversial program. There is one in my area of eastern Ontario on Wolf Island. In terms of bird and bat kill, it is the second deadliest in North America. It was constructed in the path of one of the provinces most important bird migration corridors, which is an internationally designated area. I wonder if this is water under the bridge, or wind past the windmill. What kind of assessment were you engaged in in terms of approving these types of projects?
Mr. Dupont: I must confess that this was a bit before my time.
Senator Runciman: Perhaps you could send something to us on that. I certainly would appreciate learning about that so we do not step on that in the future.
I have a couple of questions for Shared Services Canada related to the security aspect. We recently read about government workers having access to social media on their computers. Is that prohibited at this time? Are you aware?
Ms. Rallis: Departments have policies with respect to social media. It is not within the mandate of Shared Services Canada, but, as a result of the proliferation of different tools, each department has developed policies that use the guidelines around social media, including ensuring adherence to the values and ethics code of the public service.
Senator Runciman: How do we do that? Do we have monitoring software or is there a trust factor? It does provide a portal into the government system and I wonder how you monitor that.
Maurice Chénier, Senior Assistant Deputy Minister, Projects & Client Relationships, Shared Services Canada: Shared Services Canada was created first and foremost to create standards in running email, data centre and telecommunications. We all know that departments have their autonomy to run those social websites and social tools in their own departments. Shared Services Canada will provide a better standard platform where Treasury Board Secretariat chief information officer will be able to evolve and modernize their policy to let departments make better choices. Every departmental chief information officer today has an accountability to ensure the proper handling of information in their department. Various departments are monitoring access to those sites where they deem appropriate.
Senator Runciman: It seems that it should be standardized across government and not department based. I will read from a report done in 2006, which involved Public Safety Canada, Bell Canada and the Rand Corporation:
There is incontrovertible documented evidence of a clear aggressive and sophisticated threat, widespread attacks and measurable losses affecting all critical public and private sectors in Canada.
It strikes me as a significant priority. Standards should apply across government and not be based on departmental mandates.
There is a reallocation in here from the RCMP. You talked about this not involving applications, so I am not sure how this would work. Does this have any impact on their cybercrime unit or is that a separate issue?
Mr. Chénier: Like the dealings we have with every department, we have a fundamental principle whereby Shared Services Canada operates the infrastructure. Never on any occasion will Shared Services Canada have any access to departmental program data.
In response to your question specific to the RCMP, Shared Services Canada will not be in charge and will not have any access to their policing system or their cyber data on crimes in Canada. However, we will be operating their hardware and software in support of their program. The RCMP will retain their integrity in managing that information.
Of course, with standardization across Canada, we hope and we are targeting to make it easier to detect cyber issues happening in the Government of Canada as we reduce the number of networks that are potential open doors, at the end of the day, to the Government of Canada.
Senator Callbeck: In view of time, I will put my questions and you can get back to the clerk with your responses.
The Chair: Any that you can answer quickly, please do so. Otherwise, if you can send us a written answer, that would be appreciated.
Senator Callbeck: Mr. Dupont, on page 260, the second last line, the contributions to Saskatchewan Power/ Maritime Electric Power are eliminated for the year. What was that contribution for and why is it being eliminated?
My second question is on the Pulp and Paper Green Transformation Program. An amount of $549.8 million is taken out. As I recall, that program was set up some time ago to help our industry in Canada. Otherwise, we are at a disadvantage as compared to the Americans. Has the situation changed in the United States? If we eliminate this program, will that threaten the financial situation of our Canadian firms? Maybe it is the case that we can expect to see this program being renewed in the supplementary estimates?
For Public Works and Government Services Canada, my question is on the Canadian Language Sector Enhancement Program at page 310. I would like to have information on that and the breakdown as to who gets the contributions and what the criteria are for giving contributions.
Page 309 shows a reduction of $41.9 million in funding in accordance with Budget 2011 Strategic Review. I would like to see a breakdown of these savings.
The Chair: Can you answer any of those quickly or would you like to provide written responses?
Mr. Dupont: I can answer quickly. For the Saskatchewan Power/Maritime Electric Company, there was an undertaking over 10 years to purchase green power from those two utilities at a cost of $17 million to the Government of Canada over those 10 years. In the province of Prince Edward Island now, wind power forms a significant proportion of the load, and the program would have been instrumental in facilitating this. The program no longer necessarily needs to continue to subsidize this; it is actually done quite cost effectively in Prince Edward Island.
On the Pulp and Paper Green Transformation Program, there was a temporary program in the United States that affected in particular the competitive playing field. That program was not renewed to the same extent in the United States. I would add that there are other programs that we have continued, such as investment in the forest and tree transformation has also been helpful to ensure that there is continued renewal in the forest industry sector. There is no question that competitive pressure continues with the United States, but new market opportunities are also showing up, particularly in Asia-Pacific. There is a range of transformations taking place in the industry, and NRCan remains engaged in trying to facilitate adjustment to those circumstances.
Senator Nancy Ruth: This morning, on CBC, it was announced that there will be changes to your department, with a focus on innovation. Can you let us know more about that? Where in your budget will it come from since it seems to be allocated in three amounts?
The other thing I wanted to ask you is about nuclear clean-up, although it is not in here. Pine point, Northwest Territories, 1970s, Russian missile drops. There is some activity going on in the Northwest Territories around health problems occurring 40 years later. Is there any budget item in your department that would relate to that?
For IT, the answer to Senator Runciman around the RCMP applies to CSIS, DND, and so on and so forth. To Public Works, the former Auditor General, Sheila Fraser, said, in her time, that 24 Sussex Drive needed to be renovated or rebuilt. Is there any money in your budget to do that?
The Chair: Can any of those be answered quickly?
Mr. Treusch: Yes, we are not responsible for 24 Sussex.
Senator Nancy Ruth: Who is?
Mr. Treusch: The National Capital Commission.
Senator Nancy Ruth: John Baird.
Mr. Chénier: It definitely applies to not only the four departments you mentioned but also to all departments that we will be providing email, data centre, and data communication services to.
Mr. Dupont: Not having seen the story or being familiar with the event in the Northwest Territories, I would like to get back to you on those issues, if that is okay, senator.
Senator Gerstein: Ms. Rallis, in your opening remarks, you stated that some of the benefits of consolidating across 43 departments are immediate. I would like to key in on that word "immediate.'' You also say, "We can harvest these savings in our efforts to reduce costs.'' You then go on to say that the department is responsible for a total budget of $1.8 billion.
Could you provide the committee with an outline of what you have set up as your benchmarks for annual savings in establishing the program? Without that, I do not know how you can evaluate the success of it. Thank you.
Ms. Rallis: Thank you very much. I will try to respond quickly.
I will give you an example to illustrate the point around the harmonization and consolidation dividends. Since we were created in August, I would characterize us as being in the counting business — counting the number of employees, the numbers of licences, the number of telecom contracts that individual departments have established, et cetera. When we talk about immediate savings that we can generate to put into our investment pool to support the transformation, a very concrete example is that across the departments there are 330,000 Centrex phones, 50-year-old technology. They cost $31 per month. There are initiatives underway to move to Voice over IP, which costs about $15 per month. That is a concrete illustration.
Senator Gerstein: With due respect, I would like you to get back to us on that. There must be a number that you are focused on, in your whole business plan, as to what you are delivering to taxpayers of Canada and as to what you will save with this total project. You cannot give it to us on a one-by-one basis. What are the savings you have established? It is a $1.8 billion budget. Is it "x'' millions, "x'' plus millions? We should know. We should not have to wait eight years for you to come back and tell us that this is the program and that it is successful or not successful.
The Chair: Can you tell us how much has been transferred into shared services to all the other departments?
Ms. Rallis: The planned estimates that we are seeking authority on are based on the information that we have from the 43 different departments. That is the information. Since we were created, the funds have been fenced, and we are seeking authority for that money to be moved into Shared Services Canada.
The Chair: The $1.4 billion appropriation is not inflated at all; it is just the sum of all the amounts that would have been appropriated for various departments. Is that correct?
Ms. Rallis: That is correct.
Senator Finley: Why would you use salary as the basis for allocation as opposed to people or function?
The Chair: Could you provide us with a written answer to that?
Senator Buth: A question to Mr. Dupont. You have a decrease of $22 million for eco-energy for biofuels-producer incentives. I am aware that $500 million of this total fund was allocated to biodiesel initiatives. I would like to know, was this totally allocated, and has a review of the advancement of the projects approved been completed?
Mr. Dupont: Perhaps I can come back with a more fulsome answer in writing.
The Chair: Yes, we would prefer that. I do apologize on behalf of the Standing Senate Committee on National Finance for this being so rushed. We could obviously spend a lot more time, but somehow we do not get these estimates until late. We have been working very hard at different times, outside of our normal sitting times, to try to deal with these because they form the basis for and support supply bills that will be coming down. I know you will want to see these appropriations so that you can get on with things as of April 1.
That is our excuse. We will look forward to perhaps seeing each of you again, later in the year, to talk about matters. Thank you very much for being here.
Colleagues, we meet this afternoon with Correctional Services Canada and Heritage Canada for an hour and a half. We could not get a room at Centre Block, so we are at 257 East Block. That is what we had anticipated would be all of our initial view of the Main Estimates. We have a meeting tomorrow evening — not tomorrow afternoon but tomorrow evening — to deal, hopefully, with the Supplementary Estimates (C) report. Then we will file that on Thursday. There is usually a one-day wait before we can start dealing with it. Since next week is a break week, that means it will be when we get back.
(The committee adjourned.)